INDIABIX-PLANT ECONOMICS Flashcards
Direct costs component of the fixed capital consists of
contingencies
onsite and offsite costs
labour costs
raw material costs
onsite and offsite costs
Out of the following, the depreciation calculated by the __________ method is the maximum.
diminishing balance
straight line
sum of the years digit
sinking fund
diminishing balance
The ratio of working capital to total capital investment for most chemical plants (except for non-seasonal based products) is in the range of __________ percent.
0.1 to 1
1 to 2
10 to 20
50 to 60
10 to 20
Utilities cost in the operation of chemical process plant comes under the
plant overhead cost
fixed charges
direct production cost
general expenses
direct production cost
__________ method for profitability evaluation of a project does not account for investment cost due to land.
Net present worth
Pay out period
Discounted cash flow
Rate of return on investment
Pay out period
Nominal and effective interest rates are equal, when the interest is compounded
quarterly
semi-annually
annually
in no case, they are equal
annually
Which of the following elements is not included in the scope of market analysis?
Competition from other manufactures.
Product distribution.
Opportunities
Economics
Economics
Which of the following is not a component of working capital?
Raw materials is stock.
Finished products in stock.
Transportation facilities.
Semi-finished products in the process.
Transportation facilities.
In declining balance method of depreciation calculation, the
A) value of the asset decreases linearly with time.
B) annual cost of depreciation is same every year.
C) annual depreciation is the fixed percentage of the property value at the beginning of the particular year.
D) none of these.
C) annual depreciation is the fixed percentage of the property value at the beginning of the particular year.
For a given fluid, as the pipe diameter increases, the pumping cost
decreases.
increases.
remains the same.
may increase or decrease, depending upon whether the fluid is Newtonian or non-Newtonian.
decreases.
In which of the electric power generation system, the operating cost is minimum ?
Thermal
Nuclear
Hydroelectric
Fast breeder reactor
Hydroelectric
Operating profit of a chemical plant is equal to
A) profit before interest and tax i.e., net profit + interest + tax
B) profit after tax plus depreciation
C) net profit + tax
D) profit after tax
A) profit before interest and tax i.e., net profit + interest + tax
In a manufacturing industry, break even point occurs, when the
A) total annual rate of production equals the assigned value.
B) total annual product cost equals the total annual sales.
C) annual profit equals the expected value.
D) annual sales equals the fixed cost.
B) total annual product cost equals the total annual sales.
Gross earning is equal to the total income minus
total product cost
fixed cost
income tax
none of these
total product cost
Scheduling provides information about the
A)proper utilisation of machines.
B)means to minimise idle time for machines.
C)time of completion of job.
D)time of starting of job and also about how much work should be completed during a particular period.
D)time of starting of job and also about how much work should be completed during a particular period.
The inventory of raw materials included in the working capital is usually about __________ months supply of raw materials valued at delivery prices.
one
three
six
twelve
one
Which of the following is the costliest material of construction used in pressure vessel construction?
Low alloy steel
Lead
Titanium
High alloy steel
Titanium
‘Utilities’ in a chemical process plant includes compressed air, steam, water, electrical power, oxygen, acetylene, fuel gases etc. Utility costs for ordinary chemical process plants ranges roughly from __________ percent of the total product cost.
1 to 5
10 to 20
25 to 35
35 to 45
10 to 20
__________ taxes are based on gross earnings.
Property
Excise
Income
Capital gain
Income
Which of the following is a component of working capital investment ?
Utilities plants.
Maintenance and repair inventory.
Process equipments.
Depreciation.
Maintenance and repair inventory.
Six-tenth factor’ rule is used for estimating the
equipment installation cost.
equipment cost by scaling.
cost of piping.
utilities cost.
equipment cost by scaling.
Personnel working in the market research group is reponsible for the job of
equipment selection.
product evaluation.
equipment design.
cost estimation.
product evaluation.
“Break-even point” is the point of intersection of
fixed cost and total cost.
total cost and sales revenue.
fixed cost and sales revenue.
none of these.
total cost and sales revenue.
The payback method for the measurement of return on investment
A)gives a correct picture of profitability.
B)underemphasises liquidity.
C)does not measure the discounted rate of return.
D)takes into account the cash inflows after the recovery of investments.
C)does not measure the discounted rate of return.
Annual depreciation costs are constant, when the __________ method of depreciation calculation is used.
declining balance
straight line
sum of the years digit
none of these
straight line
Cost incurred towards __________ in a chemical plant is a component of the utilities cost.
water supply
running a control laboratory
property protection
medical services
water supply
Annual depreciation cost are not constant when, the __________ method of depreciation calculation is used.
straight line
sinking fund
present worth
declining balance.
declining balance.
Which of the following is not a component of depreciation cost ?
Repairs and maintenance cost.
Loss due to obsolescence of the equipment.
Loss due to decrease in the demand of product.
Loss due to accident/breakdown in the machinery.
Repairs and maintenance cost.
A series of equal payments (e.g., deposit or cost) made at equal intervals of time is known as
perpetuity
capital charge factor
annuity
future worth
annuity
A shareholder has __________ say in the affairs of company management compared to a debenture holder.
more
less
same
no
more
Which of the following is not a component of the working capital for a chemical process plant ?
Product inventory.
In-process inventory.
Minimum cash reserve.
Storage facilities.
torage facilities.
Which of the following methods of depreciation calculations results in book values greater than those obtained with straight line method ?
Multiple straight line method
Sinking fund method
Declining balance method
Sum of the years digit method
Sinking fund method
Total product cost of a chemical plant does not include the __________ cost.
market survey
operating labour, supervision and supplies
overhead and utilities
depreciation, property tax and insur-rance
market survey
Depreciation is __________ in profit with time.
decrease
increase
no change
none of these
decrease
Gantt chart (or Bar chart) is helpful in
efficient utilisation of manpower and machines.
preparing production schedule.
efficient despatching of products.
inventory control.
preparing production schedule.
Profit is equal to revenue minus
book value
total cost
operating cost
none of these
total cost
In financial accounting of a chemical plant, which of the following relationship is invalid?
Assets = equities
Assets = liabilities + net worth
Total income = costs + profits
Assets = capital.
Assets = capital.
An annuity is a series of equal payments occuring at equal time intervals, and this amount includes the sum of all payments plus interest, if allowed to accumulate at a definite rate of interest from the time of initial payment to the end of annuity term. Ordinary annuity is used in the calculation of the
manufacturing cost.
depreciation by sinking fund method.
discrete compound interest.
cash ratio.
depreciation by sinking fund method.
Which of the following does not come under the sales expenses for a product of a chemical plant ?
Advertising
Warehousing
Legal fees
Customer service.
Legal fees
Effluent treatment cost in a chemical plant is categorised as the __________ cost.
fixed
overhead
utilities
capital
utilities
Factory manufacturing cost is the sum of the direct production cost
fixed charges and plant overhead cost.
and plant overhead cost.
plant overhead cost and administrative expenses.
none of these.
fixed charges and plant overhead cost.
Fixed capital investment of a chemical plant is the total amount of money needed to supply the necessary plant and manufacturing facilities plus the working capital for operation of the facilities. Which of the following components of fixed capital investment requires minimum percentage of it ?
Electrical installation cost.
Equipment installation cost.
Cost for piping.
Equipment insulation cost.
Equipment insulation cost.
Which of the following is the cheaptest material of construction for the storage of sodium hydroxide upto a concentration of 75% ?
Stainless steel
Plain carbon steel
Nickel
Copper
Plain carbon steel
The value of a property decreases __________ with time in straight line method of determining depreciation.
linearly
non-linearily
exponentially
logarithmically
linearly
Which of the following is not a mathematical method for evaluation of profitability of a chemical process plant?
a) Cash reserve.
b) Rate of return on investment.
c) Payout period.
d) Discounted cash flow based on full life performance.
a) Cash reserve.
With increase in the discounted cash flow rate of return, the ratio of the total present value to the initial investment of a given project
decreases
increases
increases linearly
remains constant
decreases
Optimum economic pipe diameter for fluid is determined by the
a) viscosity of the fluid.
b) density of the fluid.
c) total cost considerations (pumping cost plus fixed cost of the pipe).
d) none of these.
c) total cost considerations (pumping cost plus fixed cost of the pipe).
Pick out the wrong statement.
a) Gross margin = net income - net expenditure
b) Net sales realisation (NSR) = Gross sales - selling expenses
c) At break even point, NSR is more than the total production cost
d) Net profit = Gross margin - depreciation - interest
c) At break even point, NSR is more than the total production cost
Which of the following is not a current asset of a chemical company ?
Inventories
Marketable securities
Chemical equipments
None of these.
Chemical equipments
The __________ of a chemical company can be obtained directly from the balance sheet as the difference between current assets and current liabilities.
cash ratio
net working capital
current ratio
liquids assets
net working capital
Which of the following ceramic packing materials is the costliest of all ?
Berl saddles
Raschig rings
Pall rings
Intalox saddles
Berl saddles
Manufacturing cost in a chemical company does not include the
fixed charges.
plant overheads.
direct products cost.
administrative expenses.
administrative expenses.
Expenditure on research and development (R & D) is categorised as the __________ , while making an estimate of the total product cost for a chemical plant.
overhead cost
fixed expenses
general expenses
direct production cost
general expenses
For a typical project, the cumulative cash flow is zero at the
end of the project life.
break even point.
start up.
end of the design stage.
break even point.
‘Lang factor’ is defined as the ratio of the capital investment to the delivered cost of major equipments. The value of ‘Lang factor’ for fixed capital investment, for a solid-fluid processing chemical plant ranges from
1.2 to 1.4
2.5 to 2.7
4.2 to 4.4
6.2 to 6.4
4.2 to 4.4
A balance sheet for a chemical plant shows its financial condition at any given date. It does not contain the __________ of the plant.
current asset
current liability
long term debt
profit
profit
The ‘total capital investment’ for a chemical process plant comprises of the fixed capital investment and the
overhead cost
working capital
indirect production cost
direct production cost
working capital
Generally, income taxes are based on the
total income
gross earning
total product cost
fixed cost
gross earning
A balance sheet for an industrial concern shows
the financial condition at any given time.
only current assets.
only fixed assets.
only current and fixed assets.
the financial condition at any given time.
Which of the following is not a component of the fixed capital for a chemical plant facility?
Raw materials inventory.
Utilities plants.
Process equipment.
Emergency facilities.
Raw materials inventory.
Functional depreciation of an equipment is the measure of decrease in its value due to its
ageing
wear and tear
obsolescence
breakdown or accident
obsolescence
The ratio of gross annual sales to the fixed capital investment is termed as the __________ ratio.
cash reserve
capital
turnover
investment
turnover
Effective and nominal interest rates are equal, when the interest is compounded
annually
fortnightly
monthly
half-yearly
annually
Pick out the correct statement.
a) Difference between income and expense is termed as gross revenue.
b) Unamortized cost is the difference between the original cost of a property and all the depreciation charges made to date.
c) Sum-of-the-years-digits methods of depreciation calculation accounts for the interest on the investment.
d) Scrap value is the net amount of money obtainable from the sale of used property over and above any charges involved in its removal & sale.
b) Unamortized cost is the difference between the original cost of a property and all the depreciation charges made to date.
Optimum number of effects in a multiple effect evaporator is decided by the
cost benefit analysis.
floor area availability.
terminal parameters.
evaporation capacity required.
cost benefit analysis.
Which of the following is the costliest source of getting hydrogen on commercial scale for the manufacture of nitrogeneous fertiliser ?
Coal gasification
Steam reforming of naphtha
Electrolysis of water
Coke oven gas
Electrolysis of water
